Claiming Social Security: 7 Tools and Rules for DIY Investors

Deciding when to claim Social Security is tricky — and the wrong decision can be costly. DIY investors shouldn't leap in without these tools and rules. When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.You are now subscribedYour newsletter sign-up was successfulWant to add more newsletters?Delivered dailyKiplinger TodayProfit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.Sent five days a weekKiplinger A Step AheadGet practical help to make better financial decisions in your everyday life, from spending to savings on top deals.Delivered dailyKiplinger Closing BellGet today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.Sent twice a weekKiplinger Adviser IntelFinancial pros across the country share best practices and fresh tactics to preserve and grow your wealth.Delivered weeklyKiplinger Tax TipsTrim your federal and state tax bills with practical tax-planning and tax-cutting strategies.Sent twice a weekKiplinger Retirement TipsYour twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirementSent bimonthly.Kiplinger Adviser AngleInsights for advisers, wealth managers and other financial professionals.Sent twice a weekKiplinger Investing WeeklyYour twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.Sent weekly for six weeksKiplinger Invest for RetirementYour step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose. For many do‑it‑yourself (DIY) investors, Social Security is more than just a government benefit — it's a built‑in, inflation‑adjusted, lifetime income stream that plays a central role in retirement planning.Deciding when and how to claim Social Security can have a larger financial impact than most investment decisions.Below are seven strategies and frameworks DIY investors can use to help optimize their Social Security claiming decisions.Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail.Your claiming age determines your monthly benefit. Age 62 is the earliest Social Security claiming age. If you choose to claim at this age, you will receive approximately 70-75% of your full retirement benefits, depending on your birth year.It's important to note that claiming at this age means you will receive a lower monthly income, but for longer.Ages 66 or 67, also depending on your birth year, are considered the full retirement age (FRA).

If Social Security is claimed at this time, you will receive 100% of your full retirement benefit.However, there is a third option. You can wait to claim your Social Security benefits until the maximum delay age of 70 years old. If you wait until age 70, you'll receive approximately 124-132% of your full benefit thanks to delayed retirement credits of 8% per year after FRA.About Adviser IntelThe author of this article is a participant in Kiplinger's Adviser Intel program, a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.For DIY investors, the most important takeaway is that claiming early is a bet on having a short life expectancy. In contrast, delaying benefits is a bet on longevity and 8% per year growth (plus inflation adjustments) from the U.S. government.It's important to note that this 8% annual increase in benefits is not market‑linked — it's a policy‑driven increase.The traditional way to work out when to claim Social Security benefits is to calculate your "break‑even age."This analysis compares the cumulative benefits received under different claiming ages and identifies the age at which delaying begins to produce higher total payouts than claiming earlier.If you expect to live beyond your early 80s, delaying benefits typically helps produce more lifetime income.However, DIY investors should look beyond this simple break‑even math:Longevity risk matters more than average life expectancy. Living longer than expected can make delaying benefits more valuable.Spousal considerations are critical. A surviving spouse often receives the higher benefit, so delaying can be a form of spousal protection.Late‑life expenses tend to rise. Health care and caregiving costs increase over time, and a larger guaranteed income helps reduce portfolio withdrawals in those years.To help account for these factors, DIY investors should run personalized scenarios that incorporate health, marital status and other income sources, and use Social Security calculators to help determine the most appropriate claiming age for their financial situation.This is where DIY investors can help optimize their benefits. A common framework is to delay Social Security while drawing from your portfolio in early retirement. When used thoughtfully, this approach can help improve both income stability and risk management.Delaying benefits can increase income later in life, creating a stronger income floor. Early withdrawals often occur when the portfolio is at its largest, which can help mitigate required minimum distributions (RMDs).In addition, higher guaranteed income in later years can help lower stock market sequence-of-returns risk by reducing reliance on market performance during vulnerable phases of retirement.This strategy is especially effective for DIY investors with sufficient savings, for example 25 times your annual expenses or more, or for those who want to reduce long-term market exposure.DIY investors often underestimate the significant tax interplay of Social Security. It's vital to keep in mind that up to 85% of Social Security benefits can be taxed depending on "provisional income."Claiming benefits and working in the years before your FRA can lead to benefit reductions owing to the earnings test, and claiming later gives you more years to help perform Roth conversions at quite possible low tax rates, particularly those years between retirement and RMD age.For married couples, the primary goal often is to maximize household lifetime benefits.To achieve this, you may consider having the higher-earning spouse delay retirement benefits until age 70 while having the lower-earning spouse claim their benefits earlier, around the ages of 62 to 65.This allows the surviving spouse to receive higher benefits for life and locks in the maximum benefit for the high earner. Keep in mind that this strategy may be worth hundreds of thousands of dollars over a normal longevity range.This coordination is essential because Social Security is effectively a survivor benefit plan, a longevity hedge and a lifetime inflation‑protected annuity.Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel, our free, twice-weekly newsletter.When it comes to Social Security, claiming early often only makes sense in specific financial situations.If possible, you should look to avoid claiming early unless you have severe health issues that are expected to reduce longevity, you have no income sources, you're bridging a financial emergency, or you expect future benefits to be taxes at a high rate.For most, claiming early permanently reduces financial flexibility.DIY investors should not rely on rules of thumb. There are many tools that can help provide precision to help validate your decisions on when to claim your benefits.Some of those tools include open-source calculators, Social Security Administration (SSA) benefit estimators, and retirement planning software such as portfolio withdrawal models and tax-planning tools.The best approach is to model multiple claiming scenarios and analyze them alongside portfolio longevity, taxes and spousal benefits.For DIY investors, Social Security is not a one-time decision, but a long-term planning lever that can affect income stability, taxes, portfolio risk and spousal security.By modeling multiple scenarios and treating Social Security as a core component of retirement income planning rather than an afterthought, you can seek to improve outcomes over the course of retirement.This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.Vincent Birardi is based in Halbert Hargrove’s Long Beach headquarters and brings more than 25 years of experience in financial services to his wealth advisory relationships with clients — along with a passion for identifying solutions that will enable them to fulfill their life goals. What he values most about his role is helping to bring clarity and peace of mind to clients and their families. Prior to joining the firm in 2018, Vincent held management roles with PIMCO and Morgan Stanley. He was awarded the ACCREDITED INVESTMENT FIDUCIARY™ designation by the University of Pittsburgh-affiliated Center for Fiduciary Studies and is a CERTIFIED FINANCIAL PLANNER™ professional.